Poor Director’s Loan Advice
Director’s loans can be a legitimate way for company directors to access funds from their business, but they must be handled carefully.
Unfortunately, many accountants provide poor advice on director’s loan accounts, leaving their clients exposed to HMRC penalties and personal financial risk.
How Poor Director’s Loan Advice Happens
Director’s loan accounts (DLAs) are often misunderstood, even by accountants. Common mistakes include:
- Advising directors to take loans without explaining repayment obligations.
- Failing to warn about Section 455 Corporation Tax charges on unpaid loans.
- Overlooking benefit-in-kind charges when loans exceed £10,000.
- Treating personal expenses as business costs through the DLA.
- Encouraging “bed and breakfasting” — repaying and re-borrowing to avoid tax charges.
When accountants fail to guide directors correctly, the result is often a significant HMRC investigation.
What’s at Risk The risks of poor director’s loan advice are severe:
- Unexpected tax charges, including Section 455 liabilities.
- Personal tax bills for benefit-in-kind charges.
- Reclassification of withdrawals as salary or dividends, with higher tax implications.
- Penalties and interest added by HMRC.
- Personal liability, in some cases leading to financial hardship or company collapse.
Many directors only discover these issues when HMRC investigates — long after they trusted their accountant’s advice.
How We Help
At Tax Investigation Helpline, we understand how director’s loan accounts should be managed, and how HMRC investigates them. We provide:
- Independent review: We examine your DLA records and identify where bad advice has caused problems.
- HMRC representation: We handle enquiries directly, protecting you from further exposure.
- Correction of records: We put your accounts in order and ensure compliance moving forward.
- Negotiation: Where liabilities exist, we work to reduce penalties and arrange manageable repayments.
- Accountability: If your accountant’s negligence caused the problem, we help you hold them responsible.
Our goal is always to protect both you and your business.
Common Issues We See Frequent mistakes linked to poor director’s loan advice include:
- Accountants failing to explain the tax due on loans left outstanding.
- Directors taking money from the company assuming it was tax-free.
- Loans written off incorrectly, without proper tax treatment.
- Inadequate record-keeping encouraged or overlooked by accountants.
- Directors being advised to use the company account for personal spending.
These errors can easily escalate into large tax bills and serious disputes with HMRC.
Don’t Let Bad Advice Put You at Risk If you’ve been misadvised on director’s loans, you may feel betrayed by the accountant you trusted. But you don’t have to carry the burden alone.
We’ve helped countless directors resolve HMRC investigations caused by negligent accountancy advice. With our support, you can reduce liabilities, fix errors, and pursue accountability from your advisors.
Contact Us Today
If HMRC has contacted you about your director’s loan account, or if you suspect your accountant has given you poor advice, call Tax Investigation Helpline today. We’ll defend your position, protect your finances, and hold your accountant to account. Don’t let negligence put your future at risk.
